Press Release: Negative return during first quarter of 2016 for Juno Selection Fund
Wassenaar – April 14, 2016 – The Juno Selection Fund, which focuses on investing in European small and mid-cap (family-owned) companies, experienced a volatile start of the year. Although the 10-15% profit growth of our portfolio companies was in line with expectations, the share prices of these companies clearly did not match this expected earnings growth development. The Juno Selection Fund decreased during the first three months of the year by 9.8%.
Naturally, the Juno Selection Fund is not immune to what happens in the equity markets as a whole. We remain focused on the long term and try not to be distracted by the fluctuating share prices in the short term. The group of companies in the Juno portfolio should as a whole be able to grow its profits by 10-15% each year.
Although this earnings is expected also in 2016, the translation of earnings growth into increasing share prices is not always linear. As we have seen in the past, and will see again in the future: there will be periods when we lag behind the European equity markets. We will lose a sprint now and then, but the important thing is that we keep winning the marathon.
In 2015, our selection of extraordinary, (predominantly family-owned) companies was not only able to show a strong growth in profits (+21%), it also became clear just how successful they are: the net profit margin amounted to no less than 17% and return on capital came in at an impressive 30%. The valuation of this group has become more attractive in 2016 as share prices decreased whilst profits are increasing further. We therefore remain optimistic about the coming three quarters, and especially about the longer term. We therefore consider the weakness in the price of quality companies a good opportunity to selectively buy more shares in these strong businesses, and not in the least as a reason for concern.
Long term performance remains very strong
Juno is pleased with the achieved compound annual return of 12.9% since inception of the fund in 2008. Over this period, the fund also shows a very strong performance when compared to the indices as well as other funds in its segment.
• Return 2015: +32.9%
• Return Q1 2016: -9.8%
• CAGR past five years: +15.9%
• Assets under management in the fund have grown to more than € 120 million **
* Euromoney Smaller Companies Index
** Juno Investment Partners manages assets in excess of 185 million Euros in this strategy, divided over the Juno Selection Fund as well as separate accounts of institutional clients.
About Juno Selection Fund and Juno Investment Partners
Juno invests in unique European small- and mid-Cap companies. For the most part, these are family-owned companies, or companies where a family or management is also a shareholder. Companies that can continue to achieve predictable and stable profit growth, year after year, are considered for investment. During this selection process, the emphasis lies on return on invested capital and free cash flows that are highly predictable in nature. Our analysts / asset managers put together a highly concentrated portfolio of companies that they themselves have identified, analysed and visit frequently. These companies often remain in the portfolio for a long period of time (on average more than three years). With this investment style, Juno has achieved consistent superior investment results for its clients during the past years. The Juno Selection Fund is managed by Juno Investment Partners. Juno Investment Partners has an AFM licence for discretionary asset management for direct mandates.
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